The trick is meeting the account requirements, which can include monthly minimums on the number and dollar amount of transactions, using online rather than paper statements and having direct deposit.
For any month in which you don’t meet these requirements, you’ll earn a near-worthless 0.05 percent APY at Northpointe, for example. There’s also no guarantee that rates won’t drop after you open the account.
You should check the disclosures on any rewards account to make sure monthly fees and other costs won’t eat up your rewards, but don’t assume that these deals are too good to be true.
But you’ll have to meet requirements, such as maintaining a minimum balance to avoid a monthly fee, using direct deposit and keeping the account open for a certain length of time.
Less commonly, you’ll find banks that offer referral bonuses. But be careful about making a long-term commitment with a bank that offers a bonus. You may find that standard interest rates are puny.
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Don’t fear internet banks
Online banks are a good bet for higher yields. With the help of Bankrate.com, you’ll find rates as high as 1.4 percent APY on savings and money market accounts — far better than the near-zero rates at the nation’s biggest banks.
One option is Ally Bank, which pays 1.15 percent APY on any balance with no monthly maintenance fee.
Don’t feel that you’re locked into a bank long term. Open an account to take advantage of a good rate, then do your research again in 12 months. Don’t be scared to jump around.
Your money is perfectly safe in an online bank as long as it’s FDIC-insured. But do your due diligence on any institution you’re unfamiliar with.
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Check out high-interest, low-penalty CDs
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“Generally, any money earmarked for the short-term (one year or less) should be in a liquid position,” says Gage DeYoung, a certified financial planner and founder of Prudent Wealthcare in the Denver area. “That being said, it is frustrating to get zero percent on cash.”
And today’s average CD rates are indeed very low. Instead, look for above-average interest rates and low early withdrawal penalties.
If you can withdraw your balance anytime without sacrificing much interest, you can move your balance to higher-paying CDs as rates climb. In the meantime, you’ve locked in a higher interest rate than you could have earned by keeping that money in a savings or money market account.
You could also create a short-term CD ladder to increase your returns.
If you’re looking to earn high interest, you may have to ignore the big banks.
In fact, the big four banks — Chase, Bank of America, Wells Fargo and Citibank — offer few, if any, competitive rates on any banking product.
The amount of money kept in low-yielding money market funds is staggering. But there is lots of competition for that money, which can be easily moved out of a savings account at an institution that’s paying you well below the rate of inflation.
If you find a great deal on a savings or money market account, you can’t just park your money and forget it. Plan to move it frequently because there’s no certainty that great rate today will be great tomorrow.